Biden Says ‘only Bad Options’ To Keep Oil Prices Down

Houston — When President Biden meets Crown Prince Mohammed bin Salman in Saudi Arabia, he will follow in the footsteps of Presidents like Jimmy Carter, who visited Tehran in 1977 to toast the Shah of Iran on New Year’s Eve.

Like the Prince, the Shah was an unelected monarch whose human rights record was compromised. But Carter had to celebrate with him for cheap gasoline and a safe supply of oil, which is a big concern for people in his hometown.

As Carter and other presidents learned, Biden had few valuable tools to cut costs, especially when Russia, one of the world’s largest energy producers, started a just war against its small neighbor. Under Carter, the supply of oil needed by Western countries was threatened by the revolution in the Middle East.

During the 2020 presidential campaign, former Vice President Biden vowed to turn Saudi Arabia into a “disruptive” state for the assassination of dissident Jamal Khashoggi. But officials said last week that he plans to visit the kingdom this summer. This was the latest sign that oil has regained its center in geopolitics.

Just a few years ago, many Washington lawmakers and Texas oil and gas executives supported an energy boom that made the United States a net exporter of oil and petroleum products and strengthened energy independence. With prices soaring, the performance now looks fantastic.

Although the United States is the world’s largest oil and natural gas producer, it accounts for only 12% of the world’s oil supply. Oil prices, the main price of gasoline, can still rise or fall depending on events on the other side of the globe. No president, no matter how powerful or capable, can control him.

This is even more comforting to Americans than they were a year ago when they found out that a stop at a gas station could cost $100. As fuel prices rise, consumers can demand action and reach out to bosses who seem unwilling or uncontrollable to get them back.

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A president is always looking forward to the next election when his job or political party rule is at stake, and the president finds it impossible not to call or appeal to domestic and foreign oil producers to explore and produce more oil faster.

Bill Richardson, energy secretary for the Clinton administration, said “the president should try.” “Unfortunately, there are only bad choices. And no alternative would be worse than asking Saudi Arabia to increase production.”

Iran and Venezuela, the other two oil producers that could increase production, are US adversaries that have been severely cut off from global markets due to Western sanctions. Dealing with leaders without major concessions on issues like nuclear enrichment and democratic reform would pose a political risk to Biden.

Energy experts said even Saudi Arabia, widely known for having the largest reserve capacity, could not cut prices quickly on its own. This is because Russian production is declining and could fall even further as European countries cut back on purchases from Russia.

Chase Untermeyer, US ambassador to Qatar during the George W. Bush administration, said, “The president may be the most powerful person in the US government, but he cannot control oil prices at the pump. “President Biden will not be credited for this, even if his price falls for reasons beyond his control.”

Some Republican lawmakers and oil executives have argued that Biden can do more to boost domestic oil and gas production by opening more federal lands and waters to oil exploration in areas like Alaska and the Gulf of Mexico. It also eased restrictions on pipeline construction, allowing Canadian producers to send more oil south.

But even those plans, which environmental activists and many Democrats oppose because it hinders efforts to combat climate change, could take months for new wells to start production and years for pipelines to be built. Because of this, it will have little to no immediate effect.

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“If management gets involved in every aspect of the industry’s wish list, it will have some impact on current prices, as it will mostly relate to future production,” said Jason Bordoff, director of Columbia University’s Global Energy Center. said Politics He was an advisor to President Barack Obama. And it will have serious disadvantages in terms of political, social and environmental aspects. ”

Biden and his aides have been urging American oil officials to supply more oil, but with little success. Most oil companies are reluctant to expand production, fearing that more drilling will create an oversupply that drives prices down. They remember when oil prices fell below zero when the pandemic began. Large corporations such as ExxonMobil, Chevron, BP and Shell largely adhered to the investment budgets they set up last year before Russia invaded Ukraine.

Energy traders became too convinced that supplies would be limited, and record US and global oil prices soared after news broke that Biden was planning a trip to Saudi Arabia. Oil prices rose to about $120 a barrel on Friday, and the national average price of a gallon of gasoline rose to $4.85 on Sunday, up 20 cents from the previous week and $1.80 from a year ago, according to the AAA.

Another seemingly shaky Biden administration effort was the decision to release 1 million barrels of oil per day from the Strategic Petroleum Reserve. Analysts said it was difficult to determine the impact of these releases.

Former Vice President Joe Biden’s team also spoke with Venezuela and Iran, but progress has stalled.

The administration recently renewed its license to partially exempt the Chevron from US sanctions aimed at damaging Venezuela’s oil industry. In March, three administration officials visited Caracas to lure President Nicolas Maduro into negotiations with the opposition.

As part of another easing of sanctions, Spain’s Repsol and Italy’s Eni could start shipping small amounts of oil from Venezuela to Europe within weeks, Reuters reported on Sunday.

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Once a major US exporter, Venezuela has some of the world’s largest oil reserves. But the oil industry is so paralyzed that it could take months or years to significantly boost exports.

Biden is working with Iran to revive the 2015 nuclear deal, which was withdrawn by President Donald J. Trump. The agreement will allow Iran to export more than 500,000 barrels of oil per day, easing the global supply crisis and offsetting some of the barrels Russia does not sell. Iran also has stockpiles of nearly 100 million barrels, which can be quickly released.

However, the nuclear negotiations are not expected to bear fruit in the short term as they are engulfed in disagreement.

Of course, any deal with Venezuela or Iran could itself be Biden’s political commitment. Because most Republicans, and even some Democrats, are against compromising with the country’s leaders.

“No president wants to remove the IRGC from the list of terrorists,” said Ben Cahill, an energy expert at the Washington-based Center for Strategic and International Research, on one of the challenges in talks with Iran. “Presidents are concerned about any move that seems to make political sacrifices and overwhelm America’s enemies.”

Foreign policy experts say that while energy crises during war are inevitable, they always seem to surprise administrations that are generally not prepared for the next one. Obama’s aide, Mr. Bordoff suggested that the country invest more in electric vehicles and trucks and encourage more efficiency and energy savings to reduce energy demand.

“The history of the oil crisis shows that when a crisis strikes, politicians rush like chickens with their heads cut off, trying to figure out what they can do to provide immediate relief to consumers,” Bordoff said. He added that US leaders should better prepare the country “the next time the inevitable oil crisis hits.”